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FORM 10-K/A1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED] FOR THE FISCAL YEAR ENDED OCTOBER 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED] for the transition period from
____________ to ____________
Commission file number: 0-21282
SWISHER INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
NEVADA 56-1541396
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
6849 FAIRVIEW ROAD
CHARLOTTE, NORTH CAROLINA 28210
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (704) 364-7707
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to section 12(g) of the Act:
(Title of Class)
COMMON STOCK $.01 PAR VALUE
WARRANTS TO PURCHASE COMMON STOCK
Check whether the registrant (1) filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Check if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K [ ]
The aggregate market value of the 1,470,182 shares of Common Stock held
by non-affiliates was $12,312,774 as of February 6, 1997. The market
value of the shares was calculated based on a $8.375 closing bid price
of such shares on Nasdaq National Market on such date.
As of January 28, 1997 1,935,841 shares of the registrant's Common Stock
were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
Transitional Small Business Disclosure Format: Yes No X
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INDEX
TITLE PAGE
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ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT . . . . 3
ITEM 11 EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . 4
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . 7
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS . . . . . . 8
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth information as of February 27, 1997
regarding the directors and executive officers of the Company:
DIRECTOR
NAME AGE POSITION SINCE
--------------------- --- -------- --------
Patrick L. Swisher(1) 42 President, Chief Executive 1986
Officer and Director
W. Tom Reeder, III 44 Vice President and Director 1988
Bruce Mullan 44 Vice President of Sales
Amy K. King 41 Secretary
George K. Moore(1) 64 Director 1993
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(1)Member of Compensation Committee and Audit Committee.
PATRICK L. SWISHER has been Chief Executive Officer and a director of the
Company since 1986 and President since 1991. From 1983 through 1986, Mr.
Swisher also served as Chief Executive Officer and a director of Swisher
Services, Inc., which was subsequently merged into Swisher International,
Inc. In 1980, Mr. Swisher co-founded PSTV Corporation, a private cable
television company, and he served as president of its construction division
until 1983. From 1977 to 1980, Mr. Swisher was an owner and co-founder of
Whispers Corporation, which operated a restaurant located in Charlotte, North
Carolina. Mr. Swisher received a Bachelor of Science degree from Appalachian
State University in 1977.
W. TOM REEDER, III has served as a Vice President and a director of the
Company since 1988. From 1977 through 1988, Mr. Reeder was a manufacturer's
representative for wholesale apparel in Charlotte, North Carolina. Mr.
Reeder received a Bachelor of Science degree from Western Carolina University
in 1975.
BRUCE MULLAN has been the Company's Vice President of Sales since January
1994. From 1981 through January 1994, he was employed by US Safety Company
in Kansas City, Missouri and served as National Accounts Manager of that
company from 1988 until January 1994. Mr. Mullan received a Bachelor of Arts
degree in Economics from Hampden-Sydney College in 1975.
AMY K. KING has served as Secretary of the Company since November 1996,
and as Director of Franchise Administration since 1991. From 1984 to 1991
she served as Vice President of Franchise Administration with Econo Lodges of
America, Inc.
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GEORGE K. MOORE has served as a director of the Company since 1993. Mr.
Moore is a certified public accountant in the States of North Carolina and
Florida. Since 1984, Mr. Moore has provided financial and management
consulting to businesses located in and around the Charlotte, North Carolina
area. Prior to 1984, Mr. Moore was a partner with the accounting firm of
Main Hurdman and a predecessor, which subsequently merged into KPMG Peat
Marwick.
BOARD COMMITTEES
The Board of Directors has delegated certain of its authority to a
three-member Compensation Committee and a three-member Audit Committee. The
Compensation Committee and Audit Committee are each currently composed of
Patrick L. Swisher, an ex officio, nonvoting member of each committee, and
George K. Moore. Mr. Moore is the only member of either committee who is not
a former or current officer or employee of the Company. The third member of
each committee was also a person who was not a former or current officer or
employee of the Company; such person resigned from the Board in February
1997. The Company intends to fill the vacancy on the Board and on each
committee as soon as practicable with an outside director.
The Compensation Committee held one meeting in fiscal year 1996. The
primary function of the Compensation Committee is to review and make
recommendations to the Board with respect to the compensation, including
bonuses, of the Company's officers and to administer the Company's Stock
Option Plan.
The Audit Committee held two meetings in fiscal year 1996. The function
of the Audit Committee is to review and approve the scope of audit procedures
employed by the Company's independent auditors, to review and approve the
audit reports rendered by both the Company's independent auditors and to
approve the audit fee charged by the independent auditors. The Audit
Committee reports to the Board of Directors with respect to such matters and
recommends the selection of independent auditors.
In fiscal year 1996, the Board of Directors held one formal meeting. All
directors attended more than 75% of the aggregate of board and committee
meetings held during fiscal year 1996.
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The following table sets the annual and
long-term compensation for services in all capacity to the Company for the
three fiscal years ended October 31, 1996, 1995 and 1994 of Patrick L.
Swisher, the Company's Chief Executive Officer, W. Tom Reeder, III, Vice
President and Bruce Mullan, Vice President of Sales (the "Named Officers"),
the only executive officers whose total annual salary and bonus, or annual
salary and other compensation, exceeded $100,000 for such fiscal years.
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<TABLE>
LONG-TERM
COMPENSATION AWARDS
ANNUAL COMPENSATION -------------------
------------------------------- OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS OTHER (SHARES)(#) COMPENSATION(3)
- --------------------------- ---- --------- ----- ----- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Patrick L. Swisher 1996 $ 198,198 $ -0- $ 14,072(2) 33,000 $ 1,846
President and Chief 1995 198,052 -0- 14,072(2) --- ---
Executive Officer 1994 120,000 78,000 11,700(2) 33,000 2,249
W. Tom Reeder, III 1996 $ 105,000 $ 10,000 $ 5,909(2) 23,000 $ 525
Vice President and 1995 104,791 12,000 4,757(2) --- ---
Secretary 1994 86,300 16,500 5,200(2) 7,500 385
Bruce Mullan 1996 $ 102,328 $ --- $ --- 2,500 $ 1,334
Vice President of Sales 1995 65,000 52,500 --- --- ---
</TABLE>
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(1) Includes amounts contributed to the Company's 401(k) plan by each of the
Named Officers.
(2) Includes car lease payments for vehicles leased.
(3) Includes amounts contributed by the Company to a 401(k) plan. Excludes (i)
aircraft lease payments made by the Company to Economy Air, Inc. and (ii)
office lease payments paid to SSSW Enterprises by the Company. See "Item
12. Certain Relationships and Related Transactions."
OPTION GRANTS TABLE. The following table sets forth information concerning
grants of stock options to the Named Officers pursuant to the Company's stock
option plans during the fiscal year ended October 31, 1996.
<TABLE>
% OF TOTAL
OPTIONS GRANTED EXERCISE OR
OPTIONS TO EMPLOYEES IN BASE PRICE
NAME GRANTED (SHARES) FISCAL YEAR ($/SHARE) EXPIRATION DATE
- ------------------ ---------------- ------------- ---------- ---------------
<S> <C> <C> <C> <C>
Patrick L. Swisher 33,000 41% $3.85 April 7, 2001
W. Tom Reeder, III 23,000 28% $3.50 April 7, 2001
Bruce Mullan 2,500 3% $3.50 April 7, 2001
</TABLE>
FISCAL YEAR-END OPTIONS/OPTION VALUES TABLE. No stock options were
exercised by the Named Officers during the fiscal year ended October 31, 1996.
The following table shows the stock option values for the Named Officers as of
October 31, 1996:
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<TABLE>
NUMBER OF SECURITIES UNDER- VALUE OF UNEXERCISED IN-
LYING UNEXERCISED OPTIONS THE-MONEY OPTIONS AT
AT FISCAL YEAR-END(#) FISCAL YEAR-END($)(1)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Patrick L. Swisher ......... 142,201 33,000 $ 205,141 $ 37,950
W. Tom Reeder, III ......... 21,167 23,000 34,709 34,500
Bruce Mullan ............... 500 2,500 1,175 3,750
</TABLE>
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(1) The dollar values are calculated by determining the difference between
$5.00 per share, the closing bid price of the Common Stock on October 31,
1996, and the exercise price of the options at October 31, 1996.
No employee of the Company receives any additional compensation for his
services as a director. Non-management directors receive a fee of $500 per
meeting attended and reasonable travel or other out-of-pocket expenses and
may participate in the Company's stock option plans described below.
Other than a 401(k) retirement plan for the benefit of all employees,
the Company has no retirement, pension or profit sharing program for the
benefit of its directors, officers or other employees, but the Board of
Directors may recommend one or more such programs for adoption in the future.
STOCK OPTION PLANS
The Company adopted an Incentive Stock Option Plan in 1992 (the
"Incentive Plan"). The Incentive Plan, as amended, covers an aggregate of
250,000 shares. The Plan, designed as an incentive for executive and other
key employees, is administered by the Compensation Committee of the Board of
Directors. The Incentive Plan provides that no option may be granted at an
exercise price less than the fair market value of the Common Stock of the
Company on the date of grant. Unless otherwise specified, the options expire
up to ten years from date of grant and may not be exercised during the
initial one-year period from date of grant. Thereafter, options may be
exercised in whole or in part, depending on terms of the particular option.
At October 31, 1996, 232,568 options had been granted and were outstanding
pursuant to the Incentive Plan, of which 174,068 are currently exercisable.
The Company also adopted a Non-Qualified Stock Option Plan in 1992 (the
"Non-Qualified Plan"). The Non-Qualified Plan is also administered by the
Compensation Committee of the Board of Directors and, as amended, covers a
total of 150,000 shares. The Non-Qualified Plan provides that options may be
granted at exercise prices not less than 85% of the fair market value of the
Common Stock of the Company on the date of grant. The Compensation Committee
is empowered to grant bonuses at the time of issuance of non-qualified stock
options in an amount sufficient to cover the tax liability incurred by the
recipient at the date of grant. At October 31, 1996, 47,667 options had been
granted and were outstanding under the Non-Qualified Plan, of which 24,667
are currently exercisable.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of February 25, 1997, by (i) each
person who is known by the Company to own beneficially more than 5% of the
Company's outstanding Common Stock, (ii) each of the Company's executive
officers and directors, and (iii) all executive officers and directors as a
group. Shares not outstanding but deemed beneficially owned by virtue of the
right of an individual to acquire them within 60 days are treated as
outstanding only when determining the amount and percentage of Common Stock
owned by such individual. Each person has sole voting and sole investment
power with respect to the shares shown except as noted.
SHARES BENEFICIALLY OWNED
-------------------------
NAME AND ADDRESS(1) NUMBER PERCENT
------------------- -------- -------
Patrick L. Swisher(2)................... 320,218 15.4%
W. Tom Reeder, III(3)................... 33,809 1.7%
Bruce Mullan(4)......................... 500 *
Amy K. King(4).......................... 500 *
George K. Moore(4)...................... 24,667 1.3%
Joseph R. Lunsford(5)................... 205,000 10.2%
Armand Investment Corporation(6)........ 280,000 14.5%
All Directors and Officers as
a Group (five persons)(7)............. 379,694 17.9%
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* Less Than one percent.
(1) The address for Mr. Lunsford is 5182 Old Drive Highway, Forest Park,
Georgia 30050. The address for Armand Investment Corporation is
4005 Tamiami Trail, Venice Florida. The address for all other persons
listed is 6849 Fairview Road, Charlotte, North Carolina 28210.
(2) Includes 142,201 shares of Common Stock issuable upon exercise of currently
exercisable options.
(3) Includes 21,167 shares of Common Stock issuable upon exercise of currently
exercisable options.
(4) Consists solely of shares of Common Stock issuable upon exercise of
currently exercisable options.
(5) Consists of 130,000 shares of Common Stock owned by Old Dixie Supply
Company and Professional Carpet Systems, Inc., which are corporations
owned by Mr. Lunsford, and 75,000 shares issuable upon the exercise of
currently exercisable options owned by such corporations.
(6) Armand Investment Corporation acquired such shares from Patrick L. Swisher
in connection with an estate and tax planning program for Mr. Swisher.
Mr. Swisher may be deemed to be an indirect beneficial owner of the shares.
(7) Includes 189,035 shares of Common Stock issuable upon exercise of currently
exercisable options.
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company's directors,
its executive officers, and any persons holding more than ten percent of the
Company's Common Stock are required to report their initial ownership of the
Company's Common Stock and any subsequent changes in that ownership to the
Securities and Exchange Commission, The Nasdaq Stock Market, Inc. and the
Company. Specific due dates for these reports have been established and the
Company is required to disclose in this report and in its proxy statement any
failure to file, or late filing, of such reports. Based solely on the
Company's review of Forms 3, 4 and 5 and amendments thereto furnished to the
Company and written representations with respect to filing of such Forms, the
Company believes that the only failures to file, or late filings, of any such
reports due through the most recent fiscal year related to the grant of
options to Messrs. Swisher, Reeder and Moore.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As described below, the Company has entered into a number of
transactions with officers and directors in the past. The Company has
adopted a policy that transactions with directors, officers or entities of
which they are also officers or directors or in which they have a financial
interest, will generally be on terms consistent with industry standards and
approved by a majority of the disinterested directors of the Company's Board
of Directors. This policy, which is set forth in the Company's Articles of
Incorporation, provides that no such transactions by the Company shall be
either void or voidable solely because of such relationship or interest of
directors or officers or solely because such directors are present at the
meeting of the Board of Directors of the Company or a committee thereof which
approves such transaction or solely because their votes are counted for such
purpose. In addition, interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors of the Company or
a committee thereof which approves such a transaction.
The Company leases from Economy Air, Inc. ("Economy Air"), a North
Carolina corporation owned by Mr. Swisher, a twin engine airplane to provide
corporate travel for Company personnel. The current lease, entered into in
November, 1993 and effective through October 15, 1998, obligates the Company
to make monthly lease payments to Economy Air, together with charges for
maintenance and fuel for aircraft use. The amount of the lease payment
approximates the total of the monthly loan payment, insurance, taxes and
hanger rent paid by Mr. Swisher. Economy Air received lease payments and
maintenance charges aggregating $126,950, $88,809 and $73,696, respectively,
during the fiscal years ended October 31, 1996, 1995 and 1994.
In 1993, the Company and B.S. Associates, a partnership in which Mr.
Swisher is a partner, entered into a lease agreement pursuant to which the
Company leases its new headquarters from the partnership for a term of seven
years, expiring March 2000. In 1995, B.S. Associates sold the facilities and
assigned the lease to SSSW Enterprises, a general partnership in which Mr.
Swisher is a one-third partner. The lease provides for a monthly rental of
$8,000. The lease payment is to escalate in accordance with the consumer
price index during the term of the lease. During the fiscal years ended
October 31, 1996, 1995 and 1994, the Company made lease payments of $127,501,
$108,187 and $96,400, respectively.
During 1996 and 1995, the Company made advances of $77,000 and $33,000,
respectively, to Mr. Swisher on unsecured, interest-free bases. These advances
are payable on demand.
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On July 30, 1996, the Company purchased substantially all of the assets
of Surface Doctor, an operating division of Professional Carpet Systems, Inc.
("PCS") and Old Dixie Supply Company ("ODS"). The Surface Doctor assets were
purchased in exchange for 200,000 shares of the Company's restricted Common
Stock, an option to purchase 75,000 shares of the Company's Common Stock at
an exercise price of $6.00 per share, and the assumption of approximately
$82,000 in liabilities relating to the Surface Doctor business. Pursuant to
the terms and conditions of certain Registration Rights Agreements entered
into by the Company, PCS and ODS, the Company has agreed to register the
securities issued to PCS and ODS under the Securities Act of 1933.
PCS and ODS are wholly-owned by Joseph R. Lunsford, who served as a
director of the Company from May 1996 until February 1997. Mr. Lunsford did
not participate in the vote taken by the Company's Board of Directors with
respect to the Surface Doctor transaction. There were no other affiliations
between the Company, PCS or ODS.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
SWISHER INTERNATIONAL, INC.
By: /s/ Patrick L. Swisher
------------------------------------
Patrick L. Swisher
President and Chief Executive Officer
Dated: February 27, 1997
Pursuant to the requirements of the Securities Act of 1934, this report has
been signed by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Patrick L. Swisher President, Chief Executive and February 27, 1997
- -------------------------- Financial Officer and Director
Patrick L. Swisher
/s/ W. Tom Reeder Vice President, Secretary February 27, 1997
- -------------------------- and Director
W. Tom Reeder
/s/ George K. Moore Director February 27, 1997
- --------------------------
George K. Moore
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